Labor Shortages Are a Key Issue for Housing

According to recent NAHB industry surveys, finding and hiring workers is a key challenge for home builders as construction activity grows. This issue is of such significant importance that it has been selected as a primary issue for NAHB’s 2014 legislative conference, “Bringing Housing Home,” which takes place March 17-21 as home builders and other members of the residential construction industry meet federal lawmakers.

According to the most recent NAHB survey, 65 percent of builders reported the cost and availability of labor is expected to be a significant challenge in 2014, up from 53 percent for 2013. And survey data from 2013 indicated that the limited availability of workers has produced higher construction costs (54 percent of builders), higher prices for new construction (54 percent), and created difficulties in completing projects on time (46 percent).

The challenge associated with hiring or contracting with workers is clear in government data. For example, in the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS), the number of unfilled jobs in the construction sector rose 38 percent from January 2013 to January 2014, increasing from 113,000 to 156,000.

Home building can be an engine of job creation. As of January 2014 total employment in home building stands at 2.227 million, broken down as 648,000 builders and 1.579 million residential specialty trade contractors. Over the last year the home building sector has added 101,000 jobs. And since the point of peak decline of home building employment during the recession, 243,000 positions have been added to the residential construction sector.

And this employment is spread across the nation.

The issues of housing demand and labor availability are closely tied to our nation’s immigration policy. Foreign-born workers account for 22 percent of the construction labor force nationally. Immigration is also a key driver of housing demand. For example, over ten years, 1.2 million immigrants (annual low-end Census projection) could generate 3.4 million households, occupying more than 2 million multifamily homes, 1.2 million single-family homes, and yielding 900,000 homeowners.

For these reasons, policy debates concerning fair employer verification rules (E-Verify), market-based visa systems, and comprehensive immigration reform more generally will have direct impacts on home builders and other housing stakeholders in the years ahead.

Tomorrow we will examine tax issues and housing and on Thursday the future of the housing finance system.

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